Opus Bank Initiated Outperform, PENSCO Acquisition A Near-Term Catalyst

Opus Bank OPB seems well positioned for robust growth and improved profitability, Credit Suisse’s Jill Shea said in a report. She initiated coverage of the company with an Outperform rating and a $44 price target. The analyst expects the PENSCO acquisition to boost Opus Bank’s profitability.

Opus Bank has quickly grown its portfolio of multifamily loans and has been diversifying into general C&I and specialized industry verticals, analyst Jill Shea noted, while adding that the company has the strongest loan growth among its West Coast peers.

Moreover, Opus Bank’s expense efficiency is strong relative to peers, while its infrastructure platform is scalable. “We forecast the efficiency ratio to decline into the 30s by YE16, given revenue growth and controlled expense levels,” Shea wrote.

A Near-Term Catalyst

The PENSCO acquisition is scheduled to close in 2Q16 and could result in ~300 bps of ROTCE accretion. The transaction offers incremental fee income and a funding benefit, the analyst stated.

“OPB's valuation represents an attractive entry point, given the stock's valuation relative to peers combined with positioning for improved profitability and expectations of fast growth,” Shea added.